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World stock markets slumped on Friday before a Group of Seven summit that could see world leaders clash with US President Donald Trump over his latest tariff moves.

European stock indices were down across the board following a slump in Asia - and after a week of largely strong gains in the wake of robust US jobs data and easing political headwinds in Italy and Spain.

In the eurozone, Frankfurt's DAX 30 tumbled 1.2%, hit also by data showing that industrial production in Germany unexpectedly fell in April, adding to fears of a slowdown in Europe's powerhouse economy.

"After ignoring the trade tensions for as long as they could, a rocky Asian session has left the European indices feeling rather tender," noted Connor Campbell, financial analyst at Spreadex traders.

"A likely feisty G7 meeting in Quebec appears to be the main thing driving the markets lower. Investors are either worried that nothing will get resolved, or Trump will become more entrenched in his aggressive approach to trade," he added.

In Asia on Friday, Japan's Nikkei stocks index ended 0.6% lower with dealers unmoved by news confirming Japan's economy shrank for the first time in two years in January to March.

As leaders arrive for the G7 meeting, there is talk that Trump could expect some harsh words after he imposed tariffs on steel and aluminium from Canada, Mexico and the European Union.

The move has led to retaliatory measures and sparked fears of a global trade war.

"Usually (the G7 summit is) a non-event for markets but with all the focus on escalating trade tensions amongst long-standing allies, there's a good reason for investors to be chary as this meeting is unlikely to follow an orderly arrangement of discussion," said Stephen Innes, Oanda's head of Asia-Pacific trade.

"Even more so as Canada and Mexico have retaliated against a range of US exports and the EU has promised to do so as well."

Canadian Prime Minister Justin Trudeau and German Chancellor Angela Merkel have said they expect tense discussions, while France's Emmanuel Macron said governments should not be shy about making deals without Washington.

The White House's stance on environmental issues is also expected to be on the agenda.

However, there is hope over China-US trade talks after they reached a deal allowing Chinese telecoms equipment maker ZTE to pay a $1.4bn fine instead of being hit by a seven-year ban on selling to US firms.

Oil falls back

Elsewhere on Friday, oil prices dipped a day after jumping at least 2% on a report that major producer Venezuela was struggling to ship its commodity.

Also providing support Thursday had been signs of cracks in oil cartel OPEC, with some members not as keen as kingpin Saudi Arabia to end an output cap that has been in place with Russia for two years.

"While oil prices may have seen their near-term peaks, it's highly unlikely prices will collapse but rather OPEC, through gradual supply increases, will guide prices low enough so US consumers will not feel the pinch, yet remain high enough to benefit the industry going forward," Innes added.